In my experience, freemium can be a really tough sell, and it depends on who you're after as a customer. Consumers (man I hate that word) will pay extra in small amounts as evidenced by the iPhone app store, online games, etc. but I've found it can be tougher to get them to pay for something less fun-oriented. They aren't businesses, after all.
My first business distributes an open source app and sells a paid version of it. We've been in business for 7 1/2 years now and it's been my sole source of income for 7 of those (subsequent business attempts aside :). But that's targeting businesses, and not necessarily small ones either. The freemium side of open source works to a certain size in the corporate world, because of things like the perception of support. But in this case it's software as an install not a service, and so there are problems with scale.
My next business tried to sell something to individuals (ah, much better than consumers :), and that was really tough. I discovered that about 99% of our revenue was going to come from advertising, which hit a plateau and couldn't continue to grow like we needed. C'est la vie.
My newest business is again targeting business users, again with a kind of freemium model (we offer a basic free account), and I really think we might be onto something big with it this time. So it can definitely work, but it does have its own set of challenges, and sometimes they can be killer ones.
My first business distributes an open source app and sells a paid version of it. We've been in business for 7 1/2 years now and it's been my sole source of income for 7 of those (subsequent business attempts aside :). But that's targeting businesses, and not necessarily small ones either. The freemium side of open source works to a certain size in the corporate world, because of things like the perception of support. But in this case it's software as an install not a service, and so there are problems with scale.
My next business tried to sell something to individuals (ah, much better than consumers :), and that was really tough. I discovered that about 99% of our revenue was going to come from advertising, which hit a plateau and couldn't continue to grow like we needed. C'est la vie.
My newest business is again targeting business users, again with a kind of freemium model (we offer a basic free account), and I really think we might be onto something big with it this time. So it can definitely work, but it does have its own set of challenges, and sometimes they can be killer ones.